Hailstorms Stall Cost Reduction at American

Editor

American Airlines’ announcement that its full-year costs would be higher than expected has nothing to do with volatile oil prices, but rather the vicissitudes of this spring’s weather patterns, as a violent hailstorm this spring had a disproportionate effect on American compared to its rivals.

The company had expected to hold its expenses flat for the year, excluding fuel costs; instead, costs, calculated using the industry metric of cost per available seat mile flown, are expected to rise in 2011 by 0.5% to 1.5% compared with last year. The miss isn’t for a lack of effort; a spokesman for American told CFO Journal that the carrier has put 60 cost reduction initiatives into place, worth several hundred million dollars.

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